5 Holiday Expenses That Blindside Retirees the Most (and Cost Them Hundreds)
If you find yourself getting into trouble with credit cards from holiday shopping because you overspend emotionally and then struggle to pay it down, you’re not alone.
“That debt sticks around and damages credit scores right when they might need to refinance or take out a reverse mortgage,” said Ali Zane, personal finance expert and CEO of IMAX Credit Repair Firm. “Plan holiday spending like a business: Set a budget in September, stick to it and never carry balances into the new year.”
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To help you set a budget, here’s a look at five holiday expenses that can blindside retirees the most and cost hundreds of dollars.
Travel
According to Taylor Kovar, certified financial planner (CFP) and co-founder of UseKlear.com, travel gets people almost every year.
“They budget for gifts, maybe a nice dinner and forget that seeing family costs money, too, especially with more than one trip or flights booked later than planned,” he added. “By the time the credit card statement shows up in January it's usually bigger than anyone expected.”
Hosting
Hosting is another holiday expense that may sneak up on retirees.
“If you're having everyone over, the grocery bill runs higher than people think, plus decorations or just cooking for more people than a normal week,” Kovar said.
Speaking of food costs, Melanie Musson, finance expert with Quote.com, added that groceries are “drastically” more expensive than they were a decade ago, with one meal easily costing well over $100.
Gifts for Grandkids
“The family keeps growing and nobody really sits down and does the math again,” Kovar explained. “The holidays just don't leave a lot of room for whatever number you had in your head for the month.”
Gift Exchanges
Gift exchanges are fun, but if you go to more than one party in a year with a gift exchange, you could easily spend more than you ever imagined.
“Often, these exchanges have a $25 limit and you feel like you need to spend that full amount to participate,” Musson said. “By the time you go to four parties, you’ve spent almost $100.”
Local Events
Many local holiday events are free. The challenge for budgets comes with those that charge to participate and all of the costs associated with any kind of holiday event.
You may need to purchase new clothes for the event, bring donations for charities, buy gifts or get a souvenir for yourself or the grandkids. It’s also helpful to budget for food before, during or after the event. Restaurant meals and cooking at home for guests can easily approach $200.
Bottom Line
Per Jacob Bayer, CFP and founder of Jacob Bayer Wealth Management, retirees often underestimate seasonal costs, travel to see family, heating/cooling spikes, gift-giving on fixed income and emergency home repairs that always seem to happen in winter.
“I recommend building a ‘seasonal buffer’ of two to three months of expenses separate from monthly budgets,” Bayer added. “Most retirees I work with find they're $2,000 to $5,000 short annually because they didn't anticipate these clustered expenses.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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